LUXFLAG Green Bonds

The Label LUXFLAG Green Bonds, launched in 2017, was the first dedicated label for Green Bonds in the World intended to reassure investors that Green Bonds follow internationally recognised standards and use their proceeds to finance green projects.

Generalities

Label	Luxflag-Green Bond
Nationality	Luxembourg - English
Management	label issued by LUXFLAG an independent Luxembourg non-profit rating agency.
Label type	Thematic
Website	https://www.luxflag.org/labels/green-bond/
Market	The label targets Luxembourg funds and SICAVs
Products	21 to the end of June 2022
Links to funds	https://www.luxflag.org/labels/green-bond/labelled-gbs.html
Criteria	https://www.luxflag.org/labels/green-bond/
Periodicity	24 months

Detailed data

Description	The Label Green Bond, launched in 2017, is the first of its kind worldwide and aims to reassure investors that the Green Bond follows internationally recognised standards and uses its proceeds to fund green projects.
Genesis and development	The Label Green Bond, launched in 2017, is the first of its kind worldwide. According to LuxFLAG , green bonds have a huge potential to finance climate change action and Luxembourg offers the ideal environment for this with, alongside LuxFLAG, the Luxembourg Stock Exchange listing more than 50% of green bonds worldwide
Objectives	The primary objective of the Green Bond Label is to reassure investors that the Green Bond follows internationally recognised standards and uses its proceeds to finance green projects.
Promoters and administrators	The Label was created by the LUXEMBOURG FINANCE LABELLING AGENCY, an independent and international non-profit association created in Luxembourg in July 2006 by seven public and private founding members with the aim of promoting the responsible investment sector by assigning a recognisable label to green bond investment vehicles.
SRI approach	To qualify for the label, funds must have 100% exclusionary policies on holdings and have a clearly defined thematic approach strategy.
Mandatory Criteria	The minimum criteria to be met for obtaining the label are: having an Exclusion Policy applied to 100% of holdings (Exclude those activities closely related to fossil fuels, coal and nuclear energy), a well-defined thematic approach strategy (The applicant must use its income to invest in one of the broad categories of potential eligible green projects recognised by LuxFLAG) and applying the SDGs within its own processes.
Additional criteria	Only minimum requirements for access to the label are indicated
Allocation process	The Society candidates have to verify their eligibility with Luxflag and prepare a letter of intent with a checklist of documents. The Label checks their eligibility and submits the file to the Green Bonds Label Eligibility Committee, which gives an eligibility opinion. The Board of Directors of Luxflag decides on the awarding of the label. The process takes about two months. The Label has a duration of one year and must be renewed.
External certification	The label certifies each individual obligation with the need for a review every 24 months.
Focus on transparency	The fund must follow internationally recognised guidelines/standards such as the Green Bond Principles to illustrate its commitment to transparency and disclosure. It should also provide an ex-ante evaluation of the selection process and income management carried out by an external auditor.
Focus on periodic checks	The applicant must undertake to regularly (every 24 months) produce a report (use of proceeds or audit report, sustainability/ESG report) and must also be subject to applicable regulatory requirements in EU Member States or equivalent and be issued and on a regulated stock exchange or equivalent
Related parties	Luxflag is a joint initiative of the Luxembourg Government, the Association for the Promotion of Finance in Luxembourg, the EIB, the trade association of fund managers (ALFI), the non-profit association ADA (Microcredit), the Association of Luxembourg Banks and the Luxembourg Stock Exchange.